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"Global obesity is a mega-investment theme for the next 25 years and beyond. Obesity may be the most pressing health challenge facing the world today and efforts to tackle it will shape thinking by policy makers and in boardrooms around the world"

Increasing efforts to tackle obesity over the coming decades will form
an important new investment theme for fund managers, according to a new
BofA Merrill Lynch Global Research report called “Globesity - The Global
Fight Against Obesity.”

“Global obesity is a mega-investment theme for the next 25 years and
beyond. Obesity may be the most pressing health challenge facing the
world today and efforts to tackle it will shape thinking by policy
makers and in boardrooms around the world,” said Sarbjit Nahal, equity
strategist at BofA Merrill Lynch Global Research.

The report by the BofA Merrill Lynch ESG (Environment, Social, and
Governance) and Sustainability team identifies that efforts to reduce
obesity is a “megatrend” with a shelf-life of 25 to 50 years. It charts
the rise of obesity globally and the ballooning costs. BofA Merrill
Lynch analysts across several sectors have collaborated to identify the
sectors and companies developing long-term solutions. Earlier this year,
the firm’s biotech team highlighted in “The Skinny on Obesity” the
growing potential for development of new drugs to combat weight gain.
“The FDA has historically had little risk tolerance for weight loss
drugs, but recently has shown increased support for their development,”
said Steve Byrne, biotechnology analyst at BofA Merrill Lynch Global
Research.

Globally, 500 million people are obese and 1.4 billion are overweight.
Obesity is the fifth greatest cause of death, leading to 2.8 million
fatalities each year. Worldwide prevalence of obesity doubled between
1980 and 2008, according to the World Health Organization. By 2030, 65
million more Americans will be obese if current trends continue. While
its impact is well-known in the West, obesity is rising quickly around
the world. Obesity in Europe has tripled in 30 years. It is growing
rapidly in emerging markets as diets westernize. Brazil, where 16
percent of the population is obese, is on track to match U.S. obesity
levels by the 2020s. Obesity has reached levels of up to 20 percent in
Chinese cities. A quarter of Russian women are obese.

Growing costs and tighter regulations spur fight against obesity

The costs of managing obesity are much greater than previously believed.
In May 2012, the U.S. Institute of Medicine estimated the annual cost of
obesity-related illness in the U.S. alone is more than $190 billion –
equal to 21 percent of annual medical spending. Previous studies
estimated 10 percent.

As happened with smoking, it is likely that the growing cost burden of
obesity on governments, corporates and wider society will spur
collective action and greater regulation. BofA Merrill Lynch expects
widespread scrutiny of lifestyle aspects associated with obesity
including food and drink, schools, work environments, insurers, tackling
sedentary lifestyles, and encouraging increasing physical activity.

Investment ideas for fighting globesity

Investors should take a long term view and a broad perspective in
selecting stocks as part of the globesity theme, in our view. BofA
Merrill Lynch Global Research has identified more than 50 global stocks
across four key entry points:

Pharmaceuticals and Health Care – We look at companies taking
advantage of the FDA’s increased support for obesity drug development.
We also highlight companies tackling related medical conditions and
needs including diabetes, kidney failure, hip and knee implants. We
also consider equipment such as patient lifts, bigger beds and wider
ambulance doors.

Food – We position companies on their efforts to access the $663
billion “health and wellness” market, as well as on how they are
reformulating their portfolios to respond to increasing pressure such
as “fat taxes” to reduce sugar and fat levels.

Commercial Weight Loss, Diet Management and Nutrition – Up to 50
percent of some western populations pursue dieting, targeted nutrition
and behavioral change making it a $4 billion market in the U.S. and
growing globally.

Sports Apparel and Equipment – This is the longer-term play, but we
believe that promoting physical activity will become a key priority
for more government health policies.

BofA Merrill Lynch Global ResearchThe BofA Merrill Lynch Global
Research franchise covers more than 3,300 stocks and 880 credits
globally and ranks in the top tier in many external surveys. Most
recently, the group was named Top Global Research Firm of 2011 by
Institutional Investor magazine; No. 1 in the 2012 Institutional
Investor All-Asia survey for the second consecutive year; and No. 2 in
the 2012 Institutional Investor All-China, All-Europe and All-Japan
surveys. The group was also named No. 2 in the inaugural 2012
Institutional Investor Emerging Markets Equity and Fixed Income survey,
covering Emerging Europe, Middle East and Africa; No. 2 in the 2011
All-Latin America and All-America Equity team surveys; and No. 3 in the
2011 Institutional Investor All-America Fixed Income and All-Brazil
Research team surveys.

Additionally, BofA Merrill Lynch Global Research was named the No. 1
Global Broker by Financial Times/StarMine, as well as ranking No. 1 in
the U.S. and Europe and No. 2 in Asia. The group was also named No. 1 in
Asia and No. 2 in the U.S. in the Wall Street Journal Best on the Street
2012 Analysts Surveys. The group was also the winner of the Emerging
Markets magazine’s EM Research Global Award for 2010 and 2011.

Bank of AmericaBank of America is one of the world's largest
financial institutions, serving individual consumers, small- and
middle-market businesses and large corporations with a full range of
banking, investing, asset management and other financial and risk
management products and services. The company provides unmatched
convenience in the United States, serving approximately 57 million
consumer and small business relationships with approximately 5,700
retail banking offices and approximately 17,250 ATMs and award-winning
online banking with 30 million active users. Bank of America is among
the world's leading wealth management companies and is a global leader
in corporate and investment banking and trading across a broad range of
asset classes, serving corporations, governments, institutions and
individuals around the world. Bank of America offers industry-leading
support to approximately 4 million small business owners through a suite
of innovative, easy-to-use online products and services. The company
serves clients through operations in more than 40 countries. Bank of
America Corporation stock (NYSE: BAC) is a component of the Dow Jones
Industrial Average and is listed on the New York Stock Exchange.

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